7
professional training that was essential in developing the physician’s current
marketability and earning power.
9
The third interest commonly recognized by courts to justify enforcement of a non-
compete agreement is the protection of customer or client relationships. The personal
relationships and “goodwill” cultivated between an employee and the employer’s
customers are generally considered the property of the employer. Non-compete
agreements are often sought where the employee has ongoing contact with customers
over a prolonged time period, such that she becomes the “face of the company” to
those customers. As a result, many states allow an employer to protect those customer
relationships with a non-compete agreement, on the ground that it would be unfair to
allow the employee to compete with his former employer using customer relationships
that he cultivated on his former employer’s behalf and at his former employer’s
expense. In the healthcare context, this rule equates with a medical practice’s interest in
protecting its patient base, when most patients associate the medical practice with their
personal physician. Although the “ownership” of the patient-doctor relationship raises
public policy issues discussed below, it has been recognized in several states as a
legitimate interest justifying the enforcement of a non-compete agreement.
10
9
See, e.g., Community Hosp. Grp., Inc. v. Moore, 869 A.2d 884 (N.J. 2005), and Pierson v. Medical
Health Ctrs., PA, 869 A.2d 901 (N.J. 2005), in which the New Jersey Supreme Court held that an
employer’s investment in the training of a physician (among other items) was a legitimate interest
protectable by a non-compete agreement; see also Weber v. Tillman, 913 P.2d 84, 92 (Kan. 1996)
(finding a protectable interest based on employer’s investment in setting up its practice and in recruiting
and training defendant employee; and noting that the employee “acknowledged that he had benefitted by
beginning his career in an established practice rather than starting his own.”); St. Clair Med., PC v.
Borgiel, 270 Mich. App. 260, 266 (2006) (emphasis added) (“In a medical setting, a restrictive covenant
can protect against unfair competition by preventing the loss of patients to departing physicians,
protecting an employer’s investment in specialized training of a physician, or protecting an employer’s
confidential business information or patient lists.”).
10
See, e.g., A&T Med. Inc. v. Mercadante, 2011 Pa. Dist. & Cnty. Dec. LEXIS 200 (Pa. Common Pleas
Ct. Feb. 28, 2011) (“[R]etaining patients is a compelling interest as is their interest in preventing existing
and former employees from establishing a competing medical practice using their current patients.”); Blue
Ridge Anesthesia, 389 S.E.2d at 469 (citing “customer” contacts as a protectable interest for a medical
practice); Saliterman v. Finney, 361 N.W.175 (Minn. Ct. App. 1985) (“[Minnesota] has long recognized the
uniquely vulnerable goodwill of patients which belongs to the owner of a medical practice”); Sharvelle v.
Magnante, 836 N.E.2d 432, 437 (Ind. Ct. App. 2005) (recognizing a clinic’s legitimate interest in “its good
will, its established patient base, and the time and resources spent to build its practice”); Weber, 913 P.2d
at 91 (recognizing “referral sources” as a legitimate business interest); Prairie Eye Ctr., Ltd. v. Butler, 713
N.E.2d 610, 614-15 (Ill. Ct. App. 1999) (eye clinic has protectable interest in retaining patients treated by
its employees); Mohanty, 866 N.E.2d at 93 (rejecting former employee’s argument that physician non-